Exhibit 2.1
AGREEMENT AND PLAN OF REORGANIZATION
by and among
EURO-TEL, INC.,
a Colorado corporation,
PHARMASYSTEMS COST CONTAINMENT CORP.,
a Florida corporation
XXXXXX X. XXXXXX
and
XXXXXXX X. XXXX
effective as of June 20, 1997
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AGREEMENT AND PLAN OF REORGANIZATION
THIS AGREEMENT AND PLAN OF REORGANIZATION, made and entered into this 20th
day of June 1997, by and between EURO-TEL, INC., a Colorado corporation with its
principal place of business located at 0000 X. Xxxxxx Xxxx, Xxxxx 000, Xxxxxx,
Xxxxxxxx 00000 ("ETI"), Xxxxxx X. Xxxxxx ("Telsey"), Xxxxxxx X. Xxxx, ("Xxxx"),
each a current officer and director of ETI, and PHARMASYSTEMS COST CONTAINMENT
CORP., a Florida corporation with its principal place of business located at
0000 XX 0xx Xx., #000, Xxxxx, XX 00000 ("Pharma"), who hereby agree as follows:
PREMISES
A. This Agreement provides for the merger of Pharma with and into ETI as
the surviving entity, and in connection therewith, the conversion of the
outstanding common stock of Pharma into shares of common voting stock of ETI,
all for the purpose of effecting a tax-free reorganization pursuant to sections
354 and 368(a) of the Internal Revenue Code of 1986, as amended.
B. The boards of directors of Pharma and ETI have determined, subject to
the terms and conditions set forth in this Agreement, that it is desirable and
in the best interests of all of said corporations and their stockholders, that
Pharma be merged into ETI as the surviving corporation pursuant to the laws of
the State of Colorado and Pharma shall cease to exist. This Agreement is being
entered into for the purpose of setting forth the terms and conditions of the
proposed merger.
AGREEMENT
NOW, THEREFORE, on the stated premises and for and in consideration of the
mutual covenants and agreements hereinafter set forth and the mutual benefits to
the parties to be derived herefrom, it is hereby agreed as follows:
ARTICLE I.
REPRESENTATIONS, COVENANTS AND WARRANTIES OF PHARMA
As an inducement to and to obtain the reliance of ETI, Pharma represents
and warrants as follows:
Section 1.1. ORGANIZATION. Pharma is a corporation duly organized, validly
existing and in good standing under the laws of Florida and has the corporate
power and is duly authorized, qualified, franchised and licensed under all
applicable laws, regulations, ordinances and orders of public authorities to own
all of its properties and assets and to carry on its business in all material
respects as it is now being conducted, including qualification to do business as
a foreign corporation in the jurisdiction in which the character and location of
the assets owned by it or the nature of the business transacted by it requires
qualification. Included in the Pharma Schedules (as hereinafter defined) are
complete and correct copies of the articles of incorporation, bylaws and
amendments thereto of Pharma as in effect on the date hereof. The execution and
delivery of this Agreement does not and the consummation of the transactions
contemplated by this Agreement in accordance with the terms hereof will not
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violate any provision of Pharma's articles of incorporation or bylaws. Pharma
has full power, authority and legal right and has taken all action required by
law, its articles of incorporation, its bylaws or otherwise to authorize the
execution and delivery of this Agreement.
Section 1.2. CAPITALIZATION. The authorized capitalization of Pharma
consists of 5,000,000 Common Shares, par value $0.001 per share. As of the
Closing Date (as hereinafter defined), there will be 3,372,584 shares of
Pharma's Common Stock issued and outstanding (the "Pharma Common Shares"). A
list of the Pharma shareholders, together with their respective shareholdings in
Pharma, is attached hereto and incorporated herein as EXHIBIT "A." All issued
and outstanding shares are legally issued, fully paid and nonassessable and are
not issued in violation of the preemptive or other rights of any person. Other
than as disclosed in the Pharma Schedules, Pharma has no other securities,
warrants or options authorized or issued.
Section 1.3. SUBSIDIARIES AND PREDECESSOR CORPORATIONS. Except as
otherwise set forth in the Pharma Schedules, Pharma does not have any other
subsidiaries and does not own, beneficially or of record, any shares of any
other corporation.
Section 1.4. FINANCIAL STATEMENTS. Included in the Pharma Schedules are
audited financial statements, including a balance sheet, statement of
operations, shareholder equity and cash flows and notes thereto, dated as of
December 31, 1996 (the "Audited Financial Statements") and Pharma's unaudited
balance sheet, statement of operations, shareholder equity and cash flows and
notes thereto dated March 31, 1997. Relevant thereto:
(a) the Pharma balance sheets included in the financial statements
referred to above present fairly as of its date the financial condition of
Pharma. Pharma does not have, as of the date of such balance sheet, except
as noted and to the extent reflected or reserved against therein, any
liabilities or obligations (absolute or contingent) which should be
reflected in a balance sheet or the notes thereto prepared in accordance
with generally accepted accounting principles and all assets reflected
therein are properly reported and present fairly the value of the assets
of Pharma, in accordance with generally accepted accounting principles;
(b) Pharma has no liabilities with respect to the payment of any
federal, state, county, local or other taxes (including any deficiencies,
interest or penalties), except for taxes accrued but not yet due and
payable;
(c) Pharma has filed all state, federal and local income tax returns
required to be filed by it from inception to the date hereof, if any;
(d) The books and records, financial and others, of Pharma are in
all material respects complete and correct and have been maintained in
accordance with good business accounting practices; and
(e) except as and to the extent disclosed in the most recent Pharma
balance sheet and the Pharma Schedules, Pharma has no material contingent
liabilities, direct or indirect, matured or unmatured.
Section 1.5. INFORMATION. The information concerning Pharma set forth in
this Agreement and in the Pharma Schedules is complete and accurate in all
material respects and does not contain any untrue statement of a material fact
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or omit to state a material fact required to make the statements made, in light
of the circumstances under which they were made, not misleading.
Section 1.6. OPTIONS AND WARRANTS. Other than as disclosed in the Pharma
Schedules, there are no existing options, warrants, calls or commitments of any
character to which Pharma is a party and by which it is bound.
Section 1.7. ABSENCE OF CERTAIN CHANGES OR EVENTS. Except as set forth in
this Agreement, the Pharma Schedules, or as otherwise disclosed to ETI, since
March 31, 1997:
(a) there has not been: (i) any material adverse change in the
business, operations, properties, assets or financial condition of Pharma;
or (ii) any damage, destruction or loss to Pharma (whether or not covered
by insurance) materially and adversely affecting the business, operations,
properties, assets or financial condition of Pharma;
(b) Pharma has not: (i) amended its articles of incorporation or
bylaws; (ii) declared or made, or agreed to declare or make, any payment
of dividends or distributions of any assets of any kind whatsoever to
shareholders or purchased or redeemed or agreed to purchase or redeem any
of its capital stock; (iii) waived any rights of value which in the
aggregate are extraordinary or material considering the business of
Pharma; (iv) made any material change in its method of management,
operation or accounting; (v) entered into any other material transaction;
(vi) made any accrual or arrangement for or payment of bonuses or special
compensation of any kind or any severance or termination pay to any
present or former officer or employee;
(c) Pharma has not: (i) granted or agreed to grant any options,
warrants or other rights for its stocks, bonds or other corporate
securities calling for the issuance thereof; or (ii) borrowed or agreed to
borrow any funds or incurred or become subject to, any material obligation
or liability (absolute or contingent) except liabilities incurred in the
ordinary course of business;
(d) to the best knowledge of Pharma, it has not become subject to
any law or regulation which materially and adversely affects, or in the
future may adversely affect, the business, operations, properties, assets
or financial condition of Pharma.
Section 1.8. TITLE AND RELATED MATTERS. Pharma has good and marketable
title to and is the sole and exclusive owner of all of its properties,
inventory, interests in properties and assets, real and personal (collectively,
the "ASSETS") which are reflected in the Audited Financial Statements and the
Pharma Schedules or acquired after that date (except properties, interests in
properties and assets sold or otherwise disposed of since such date in the
ordinary course of business), free and clear of all liens, pledges, charges or
encumbrances except: (a) statutory liens or claims not yet delinquent; (b) such
imperfections of title and easements as do not and will not, materially detract
from or interfere with the present or proposed use of the properties subject
thereto or affected thereby or otherwise materially impair present business
operations on such properties; and (c) as described in the Audited Financial
Statements and in the Pharma Schedules. Except as set forth in the Pharma
Schedules, Pharma owns all procedures, techniques, marketing plans, business
plans, methods of management or other information utilized in connection with
Pharma's business. Except as set forth in the Pharma Schedules, no third party
has any right to, and Pharma has not received any notice of infringement of or
conflict with asserted rights of others with respect to any product, technology,
data, trade secrets, know-how or proprietary techniques, which, singly or in the
aggregate, if the subject of an unfavorable decision, ruling or finding, would
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have a materially adverse affect on the business, operations, financial
condition of Pharma or any material portion of its properties, assets or rights.
Section 1.9. LITIGATION AND PROCEEDINGS. To the best of Pharma's knowledge
and belief, there are no actions, suits, proceedings or investigations pending
or threatened by or against Pharma or affecting Pharma or its properties, at law
or in equity, before any court or other governmental agency or instrumentality,
domestic or foreign or before any arbitrator of any kind that would have a
material adverse affect on the business, operations, or financial condition of
Pharma. Pharma does not have any knowledge of any default on its part with
respect to any judgment, order, writ, injunction, decree, award, rule or
regulation of any court, arbitrator or governmental agency or instrumentality.
Section 1.10. CONTRACTS.
(a) Except as included or described in the Pharma Schedules, there
are no material contracts, agreements, franchises, license agreements or
other commitments which would require the payment of $50,000 or more in
any one year to which Pharma is a party or by which it or any of its
assets, products, technology or properties are bound;
(b) Except as included or described in the Pharma Schedules or
reflected in the most recent Pharma balance sheet, Pharma is not a party
to any written: (i) contract for the employment of any officer or employee
which is not terminable on thirty (30) days or less notice; (ii) profit
sharing, bonus, deferred compensation, stock option, severance pay,
pension benefit or retirement plan, agreement or arrangement covered by
Title IV of the Employee Retirement Income Security Act, as amended; (iii)
agreement, contract or indenture relating to the borrowing of money in
excess of $100,000; (iv) guaranty of any obligation, other than one on
which Pharma is a primary obligor, for collection and other guaranties of
obligations, which, in the aggregate do not exceed more than one year or
providing for payments in excess of $50,000 in the aggregate; (v)
consulting or other similar contracts with an unexpired term of more than
one year or providing for payments in excess of $25,000 in the aggregate;
(vi) collective bargaining agreements; (vii) agreement with any present or
former officer or director of Pharma; or (viii) contract, agreement or
other commitment involving payments by it of more than $25,000 in the
aggregate; and
(c) To Pharma's knowledge, all contracts, agreements, franchises,
license agreements and other commitments to which Pharma is a party or by
which its properties are bound and which are material to the operations of
Pharma taken as a whole, are valid and enforceable by Pharma in all
respects, except as limited by bankruptcy and insolvency laws and by other
laws affecting the rights of creditors generally.
Section 1.11. MATERIAL CONTRACT DEFAULTS. Except as set forth in the
Pharma Schedules, to the best of Pharma's knowledge and belief, Pharma is not in
default in any material respect under the terms of any outstanding contract,
agreement, lease or other commitment which is material to the business,
operations, properties, assets or condition of Pharma, and there is no event of
default in any material respect under any such contract, agreement, lease or
other commitment in respect of which Pharma has not taken adequate steps to
prevent such a default from occurring.
Section 1.12. NO CONFLICT WITH OTHER INSTRUMENTS. Except as set forth in
the Pharma Schedules, the execution of this Agreement and the consummation of
the transactions contemplated by this Agreement will not result in the breach of
any term or provision of, or constitute an event of default under, any material
indenture, mortgage, deed of trust or other material contract, agreement or
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instrument to which Pharma is a party or to which any of its properties or
operations are subject.
Section 1.13. GOVERNMENTAL AUTHORIZATIONS. To the best of Pharma's
knowledge, Pharma has all material licenses, franchises, permits or other
governmental authorizations legally required to enable Pharma to conduct its
business in all material respects as conducted on the date hereof. Except for
compliance with federal and state securities and corporation laws, as
hereinafter provided, no authorization, approval, consent or order of, or
registration, declaration or filing with, any court or other governmental body
is required in connection with the execution and delivery by Pharma of this
Agreement and the consummation by Pharma of the transactions contemplated
hereby.
Section 1.14. COMPLIANCE WITH LAWS AND REGULATIONS. To the best of
Pharma's knowledge and except as disclosed in the Pharma Schedules, Pharma has
complied with all applicable statutes and regulations of any federal, state or
other governmental entity or agency thereof, except to the extent that
noncompliance would not materially and adversely affect the business,
operations, properties, assets or financial condition of Pharma or would not
result in Pharma's incurring any material liability.
Section 1.15. INSURANCE. All of the insurable properties of Pharma are
insured for Pharma's benefit in accordance with the insurance policies disclosed
in the Pharma Schedules under valid and enforceable policies issued by insurers
of recognized responsibility. Such policy or policies containing substantially
equivalent coverage will be outstanding and in full force at the Closing Date.
Section 1.16. APPROVAL OF AGREEMENT. The shareholders and board of
directors of Pharma have authorized the execution and delivery of this Agreement
by Pharma and have approved the transactions contemplated hereby.
Section 1.17. MATERIAL TRANSACTIONS OR AFFILIATIONS. Except as disclosed
herein and in the Pharma Schedules, there exists no material contract, agreement
or arrangement between Pharma and any predecessor and any person who was at the
time of such contract, agreement or arrangement an officer, director or person
owning of record, or known by Pharma to own beneficially, ten percent (10%) or
more of the issued and outstanding Pharma Common Shares and which is to be
performed in whole or in part after the date hereof. There are no commitments by
Pharma, whether written or oral, to lend any funds to, borrow any money from or
enter into any other material transactions with, any such affiliated person.
Section 1.18. LABOR RELATIONS. Pharma has never had a work stoppage
resulting from labor problems. To the best knowledge of Pharma, no union or
other collective bargaining organization is organizing or attempting to organize
any employee of Pharma.
Section 1.19. PREVIOUS SALES OF SECURITIES. Since inception, Pharma has
sold Pharma Common Shares to investors in reliance upon applicable exemptions
from the registration requirements under applicable federal and state securities
laws. All such sales (the "Sales") were made in accordance with such securities
laws.
Section 1.20. PHARMA SCHEDULES. Upon execution hereof, Pharma will deliver
to ETI the following schedules, which are collectively referred to as the
"Pharma Schedules" and which consist of separate schedules dated as of the date
of this Agreement and instruments and data as of such date, all certified by the
chief executive officer of Pharma as complete, true and correct in all material
respects:
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(a) copies of the articles of incorporation, bylaws and all
minutes of shareholders' and directors' meetings of Pharma;
(b) the financial statements of Pharma referenced hereinabove
in Section 1.4;
(c) a list indicating the name and address of the shareholders
of Pharma, together with the number of shares owned by them;
(d) copies of all licenses, permits and other governmental
authorizations, requests or applications therefor, pursuant to which
Pharma carries on or proposes to carry on its business (except those which
in the aggregate, are immaterial to the present or proposed business of
Pharma);
(e) a list of every debt, mortgage, security interest, pledge, lien,
encumbrance or claim of any nature whatsoever in excess of $50,000 as may
affect Pharma, its properties or assets;
(f) a list of all executive employees of Pharma, including
current compensation, and whether or not such employee is subject to a
written contract;
(g) a description of all real and personal property owned by Pharma,
together with a description of every mortgage, deed of trust, pledge,
lien, agreement, encumbrance, claim or equity interest of any nature
whatsoever in such real and personal property;
(h) copies of all material contracts, leases, agreements or other
instruments as referenced in Section 1.10, above, to which Pharma is a
party or by which it or its properties are bound;
(i) a list of all patent applications, copyrights, trademarks,
service marks and trade names that are pertinent in any manner whatsoever
to the development, testing, registration, assembly, manufacture, use or
sale of any products or services used in the business of Pharma and in
which Pharma has or previously had any direct or indirect, equitable or
legal right or interest;
(j) a copy of all material documentation relating to the sale
of Pharma Common Shares by Pharma to its present shareholders;
(k) a list of insurance policies referred to in Section 1.15;
(l) a description of any material adverse change in the business
operations, property, inventory, assets or condition of Pharma since the
most recent Pharma balance sheet required to be provided pursuant to
Section 1.7;
(m) any other information, together with any required copies of
documents required to be disclosed in the Pharma Schedules by Sections 1.1
through 1.19.
Pharma shall cause the Pharma Schedules and the instruments and data
delivered to ETI hereunder to be updated after the date hereof up to and
including the Closing Date, as hereinafter defined.
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ARTICLE II.
REPRESENTATIONS, COVENANTS AND
WARRANTIES OF ETI, TELSEY AND XXXX
As an inducement to, and to obtain the reliance of Pharma, ETI, Telsey and
Xxxx (ETI, Telsey and Xxxx are sometimes collectively referred to as the "ETI
Parties"), jointly and severally, represent and warrant as follows:
Section 2.1. ORGANIZATION. ETI is a corporation duly organized, validly
existing and in good standing under the laws of the state of Colorado and has
the corporate power and is duly authorized, qualified, franchised and licensed
under all applicable laws, regulations, ordinances and orders of public
authorities to own all of its properties and assets and to carry on its business
in all material respects as it are now being conducted, including qualification
to do business as a foreign corporation in the jurisdictions in which the
character and location of the assets owned by it or the nature of the business
transacted by it requires qualification. Included in the ETI Schedules (as
hereinafter defined) are complete and correct copies of the articles of
incorporation, amended articles of incorporation (collectively, hereinafter
referred to as the "articles of incorporation") and bylaws of ETI as in effect
on the date hereof. The execution and delivery of this Agreement does not and
the consummation of the transactions contemplated by this Agreement in
accordance with the terms hereof will not, violate any provision of ETI's
articles of incorporation or bylaws. ETI has taken all action required by law,
its articles of incorporation, its bylaws or otherwise to authorize the
execution and delivery of this Agreement. ETI has full power, authority and
legal right and has taken all action required by law, its articles of
incorporation, bylaws or otherwise to consummate the transactions herein
contemplated.
Section 2.2. CAPITALIZATION. The authorized capitalization of ETI consists
of 100,000,000 shares of Common Stock, no par value per share and 25,000,000
shares of Preferred Stock, par value $.01 per share. There are no Preferred
Shares issued or outstanding. Prior to the Closing Date, as defined hereinbelow,
the Board of Directors of ETI shall undertake a forward split of the ETI issued
and outstanding Common Stock, whereby 4 shares of Common Stock shall be issued
in exchange for every 1 share of Common Stock presently issued and outstanding,
in order to establish the number of issued and outstanding common shares to be
2,000,000. As of the Closing Date, as defined herein, there will be no more than
2,000,000 common shares issued and outstanding (the "ETI Common Shares") held by
the then existing securities holders of ETI. All issued and outstanding ETI
Common Shares have been legally issued, fully paid and are nonassessable.
Section 2.3. SUBSIDIARIES. ETI has no subsidiaries and predecessor
corporations and has not, since its formation, been party to any merger,
share exchange or similar transaction.
Section 2.4. FINANCIAL STATEMENTS.
(a) Included in the ETI Schedules are the audited consolidated
balance sheet of ETI for the years ended September 30, 1996 and 1995 and
the related statements of operations, shareholders' equity and cash flows
for the year then ended, which are included in the schedules identified in
Section 2.18(c).
(b) All such financial statements have been prepared in accordance
with generally accepted accounting principles consistently applied
throughout the periods involved. The ETI balance sheets presents fairly as
of their respective dates the financial condition of ETI. ETI did not have
as of the date of any of such ETI balance sheets, any liabilities or
obligations (absolute or contingent) which should be reflected in a
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balance sheet or the notes thereto prepared in accordance with generally
accepted accounting principles, and all assets reflected therein are
properly reported and present fairly the value of the assets of ETI, in
accordance with generally accepted accounting principles. The statements
of operations, shareholders' equity and changes in financial position
reflect fairly the information required to be set forth therein by
generally accepted accounting principles;
(c) The books and records, financial and others, of ETI are in all
material respects complete and correct and have been maintained in
accordance with good business accounting practices;
(d) ETI has no liabilities with respect to the payment of any
federal, state, county, local or other taxes (including any deficiencies,
interest or penalties) or in connection with the filing of (or failure to
file) any federal, state, county, local or other tax returns;
(e) As of the Closing Date, as defined herein the ETI balance sheet
and the notes thereto, shall reflect that ETI has: (i) no receivables;
(ii) no accounts payable; and (iii) no contingent liabilities, direct or
indirect, matured or unmatured.
(f) ETI has no material contingent liabilities, direct or
indirect, matured or unmatured.
Section 2.5. INFORMATION. The information concerning ETI as set forth in
this Agreement and in the ETI Schedules is complete and accurate in all material
respects and does not contain any untrue statement of a material fact or omit to
state a material fact required to make the statements made, in light of the
circumstances under which they were made, not misleading.
Section 2.6. ABSENCE OF CERTAIN CHANGES OR EVENTS. Except as
described herein or in the ETI Schedules, since September 30, 1996:
(a) There has not been: (i) any material adverse change in the
business, operations, properties, assets or financial condition of ETI; or
(ii) any damage, destruction or loss to ETI (whether or not covered by
insurance) materially and adversely affected the business, operations,
properties, assets or financial condition of ETI;
(b) ETI has not: (i) amended its articles of incorporation or
bylaws; (ii) declared or made, or agreed to declare or make, any payment
of dividends or distributions or any assets of any kind whatsoever to
stockholders or purchased or redeemed or agreed to purchase or redeem any
of its capital stock; (iii) waived any rights of value which in the
aggregate are extraordinary or material considering the business of ETI;
(iii) made any material change in its method of management, operation or
accounting; (v) entered into any other material transaction or (vi) made
any accrual or arrangement for or payment of bonuses or special
compensation of any kind or any severance or termination pay to any
present or former officer or employee;
(c) ETI has not: (i) granted or agreed to grant any options,
warrants or other rights for its stocks, bonds or other corporate
securities calling for the issuance thereof, which option, warrant or
other right has not been canceled as of the Closing Date (except for the
stock options described on ETI Schedule 2.6(c)); (ii) borrowed or agreed
to borrow any funds or incurred or become subject to, any material
obligation or liability (absolute or contingent) except liabilities
incurred in the ordinary course of business; and
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(d) to the best knowledge of the ETI Parties, ETI has not become
subject to any law or regulation which materially and adversely affects,
or in the future may adversely affect, the business, operations,
properties, assets or condition of ETI.
Section 2.7. TITLE AND RELATED MATTERS. As of the Closing Date, ETI
will own no real, personal or intangible property.
Section 2.8. LITIGATION AND PROCEEDINGS. Except as set forth in the ETI
Schedules, there are no actions, suits or proceedings pending or, to the best of
ETI's knowledge and belief, threatened by or against or affecting ETI, at law or
in equity, before any court or other governmental agency or instrumentality,
domestic or foreign, or before any arbitrator of any kind that would have a
material adverse effect on the business, operations, financial condition, income
or business prospects of ETI. ETI does not have any knowledge of any default on
its part with respect to any judgment, order, writ, injunction, decree, award,
rule or regulation of any court, arbitrator or governmental agency or
instrumentality.
Section 2.9. CONTRACTS. On the Closing Date (except as disclosed on
the ETI Schedules):
(a) There are no material contracts, agreements, franchises, license
agreements, or other commitments to which ETI is a party or by which it or
any of its properties are bound;
(b) ETI is not a party to any contract, agreement, commitment or
instrument or subject to any charter or other corporate restriction or any
judgment, order, writ, injunction, decree or award which materially and
adversely affects, or in the future may (as far as ETI can now foresee)
materially and adversely affect, the business, operations, properties,
assets or condition of ETI; and
(c) ETI is not a party to any material oral or written: (i) contract
for the employment of any officer or employee; (ii) profit sharing, bonus,
deferred compensation, stock option, severance pay, pension, benefit or
retirement plan, agreement or arrangement covered by Title IV of the
Employee Retirement Income Security Act, as amended; (iii) agreement,
contract or indenture relating to the borrowing of money; (iv) guaranty of
any obligation for the borrowing of money or otherwise, which, in the
aggregate exceeds $1,000; (v) consulting or other similar contract with an
unexpired term of more than one year or providing for payments in excess
of $10,000 in the aggregate; (vi) collective bargaining agreement; (vii)
agreement with any present or former officer or director of ETI; or (viii)
contract, agreement, or other commitment involving payments by it of more
than $10,000 in the aggregate.
Section 2.10. NO CONFLICT WITH OTHER INSTRUMENTS. The execution of this
Agreement and the consummation of the transactions contemplated by this
Agreement will not result in the breach of any term or provision of, or
constitute an event of default under, any material indenture, mortgage, deed of
trust or other material contract, agreement or instrument to which ETI is a
party or to which any of its properties or operations are subject.
Section 2.11. MATERIAL CONTRACT DEFAULTS. To the best knowledge and belief
of the ETI Parties, ETI is not in default in any material respect under the
terms of any outstanding contract, agreement, lease or other commitment which is
material to the business, operations, properties, assets or condition of ETI,
and there is no event of default in any material respect under any such
contract, agreement, lease or other commitment in respect of which ETI has not
taken adequate steps to prevent such a default from occurring.
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Section 2.12. GOVERNMENTAL AUTHORIZATIONS. To the best knowledge of the
ETI Parties, ETI has all licenses, franchises, permits and other governmental
authorizations that are legally required to enable it to conduct its business
operations in all material respects as conducted on the date hereof. Except for
compliance with federal and state securities or corporation laws, no
authorization, approval, consent or order of, or registration, declaration or
filing with, any court or other governmental body is required in connection with
the execution and delivery by ETI of this Agreement and the consummation by ETI
of the transactions contemplated hereby.
Section 2.13. COMPLIANCE WITH LAWS AND REGULATIONS. To the best knowledge
and belief of the ETI Parties, ETI has complied with all applicable statutes and
regulations of any federal, state or other governmental entity or agency
thereof, except to the extent that noncompliance would not materially and
adversely affect the business, operations, properties, assets or condition of
ETI or would not result in ETI's incurring any material liability.
Section 2.14. INSURANCE. ETI has no insurable properties and no
insurance policies will be in effect at the Closing Date, as hereinafter
defined.
Section 2.15. APPROVAL OF AGREEMENT. The board of directors of ETI
has authorized the execution and delivery of this Agreement by ETI and has
approved the transactions contemplated hereby.
Section 2.16. MATERIAL TRANSACTIONS OR AFFILIATIONS. As of the date of
this Agreement and as of the Closing Date there will exist no material contract,
agreement or arrangement between ETI and any predecessor and any person who was
at the time of such contract, agreement or arrangement an officer, director or
person owning of record, or known by ETI to own beneficially, ten percent (10%)
or more of the issued and outstanding common stock of ETI and which is to be
performed in whole or in part after the date hereof. ETI has no commitment,
whether written or oral, to lend any funds to, borrow any money from or enter
into any other material transactions with, any such affiliated person.
Section 2.17. LABOR RELATIONS. ETI has never had a work stoppage
resulting from labor problems. ETI has no employees other than its officers
and directors.
Section 2.18. COMPLIANCE WITH SECURITIES LAWS. ETI has filed all filings
necessary or required to be filed and is in compliance with all applicable
federal and state securities laws. All such filings were when filed and continue
to be complete and accurate and do not contain any untrue statement of material
fact required to make the statements made not misleading.
Section 2.19. ETI SCHEDULES. Upon execution hereof, ETI shall deliver to
Pharma the following schedules, which are collectively referred to as the "ETI
Schedules" which are dated the date of this Agreement, all certified by an
officer of ETI to be complete, true and accurate:
(a) complete and correct copies of the articles of
incorporation and bylaws of ETI as in effect as of the date of this
Agreement;
(b) copies of all financial statements of ETI identified in
Section 2.4(a);
(c) the description of any material adverse change in the business,
operations, property, assets, or condition of ETI since September 30, 1996
required to be provided pursuant to Section 2.6; and
11
(d) any other information, together with any required copies of
documents, required to be disclosed in the ETI Schedules by Sections 2.1
through 2.17.
ETI shall cause the ETI Schedules and the instruments to be delivered to
Pharma hereunder to be updated after the date hereof up to and including the
Closing Date. The ETI Schedules shall be complete and accurate as of the date
hereof and as of the Closing Date.
Section 2.20. NO OPERATIONS. Since its formation ETI has not (a) conducted
any operations, (b) entered into any contracts, or (c) incurred any material
liabilities not reflected in the financial statements referred to in Section 2.4
hereof.
ARTICLE III.
EXCHANGE PROCEDURE
Section 3.1. DELIVERY OF PHARMA SECURITIES. As soon as reasonably possible
after the Closing Date, the holders of the Pharma Common Shares shall deliver to
ETI (i) certificates or other documents evidencing all of the issued and
outstanding Pharma Common Shares, duly endorsed in blank or with executed stock
power attached thereto in transferrable form and (ii) investment letters, the
form of which is attached hereto as Exhibit "B"; and (iii) if applicable,
"accredited investor" letters acknowledging their personal status as accredited
investors, as that term is defined in Rule 501(a) promulgated under the
Securities Act of 1933, as amended.
Section 3.2. ISSUANCE OF ETI COMMON SHARES. (a) In exchange for all of the
Pharma Common Shares tendered pursuant to Section 3.1, ETI shall issue an
aggregate of 18,000,000 "restricted" ETI Common Shares to the Pharma
shareholders on a pro rata basis.
(a) No fractional ETI Common Shares shall be issued pursuant to this
Section 3.2. In lieu of such fractional shares, all shares to be issued
shall be rounded up or down to the nearest whole share. However, in no
event shall ETI be obligated to issue more than 18,000,000 common shares
to the shareholders of Pharma. If, due to the rounding up to the nearest
whole share, the number of shares to be issued by ETI exceeds 18,000,000,
the principal shareholders of Pharma shall receive less than their pro
rated proportion of ownership in order to insure that no more than
18,000,000 common shares are so issued.
Section 3.3. EVENTS PRIOR TO CLOSING. Upon execution hereof or as soon
thereafter as practical, management of ETI and Pharma shall execute, acknowledge
and deliver (or shall cause to be executed, acknowledged and delivered) any and
all certificates, , financial statements, schedules, agreements, resolutions,
rulings or other instruments required by this Agreement to be so delivered,
together with such other items as may be reasonably requested by the parties
hereto and their respective legal counsel in order to effectuate or evidence the
transactions contemplated hereby, subject only to the conditions to Closing
referenced hereinbelow.
Section 3.4. CLOSING. The closing ("Closing") of the transactions
contemplated by this Agreement shall be as of the date in which all of the
conditions to Closing referenced in Section 6.3 below have been satisfied or
waived by Pharma and all documentation referenced herein is delivered to the
respective party herein, unless a different date is mutually agreed to in
writing by the parties hereto (the "Closing Date").
12
Section 3.5. TERMINATION.
(a) This Agreement may be terminated by the board of directors of
either ETI or Pharma at any time prior to the Closing Date if:
(i) there shall be any action or proceeding before any court
or any governmental body which shall seek to restrain, prohibit or
invalidate the transactions contemplated by this Agreement and
which, in the judgment of such board of directors, made in good
faith and based on the advice of its legal counsel, makes it
inadvisable to proceed with the exchange contemplated by this
Agreement; or
(ii) any of the transactions contemplated hereby are
disapproved by any regulatory authority whose approval is
required to consummate such transactions; or
(iii) the conditions described in Section V (in the case of
ETI) and VI (in the case of Pharma) have not been satisfied in full.
In the event of termination pursuant to this paragraph (a) of this
Section 3.5, no obligation, right, or liability shall arise hereunder and each
party shall bear all of the expenses incurred by it in connection with the
negotiation, drafting and execution of this Agreement and the transactions
herein contemplated;
(b) This Agreement may be terminated at any time prior to the
Closing Date by action of the board of directors of ETI if Pharma shall
fail to comply in any material respect with any of its covenants or
agreements contained in this Agreement or if any of the representations or
warranties of Pharma contained herein shall be inaccurate in any material
respect, which noncompliance or inaccuracy is not cured after 20 days'
written notice thereof is given to Pharma. If this Agreement is terminated
pursuant to this paragraph (b) of this Section 3.5, this Agreement shall
be of no further force or effect and no obligation, right or liability
shall arise hereunder; and
(c) This Agreement may be terminated at any time prior to the
Closing Date by action of the board of directors of Pharma if ETI shall
fail to comply in any material respect with any of its covenants or
agreements contained in this Agreement or if any of the representations or
warranties of ETI contained herein shall be inaccurate in any material
respect, which noncompliance or inaccuracy is not cured after 20 days'
written notice thereof is given to ETI. If this Agreement is terminated
pursuant to this paragraph (c) of Section 3.5, this Agreement shall be of
no further force or effect and no obligation, right or liability shall
arise hereunder.
Section 3.6. DIRECTORS OF ETI. Upon the Closing, the present members of
ETI's Board of Directors shall tender their resignations seriatim so that the
following persons are appointed directors of ETI in accordance with procedures
set forth in the ETI bylaws: Xx. Xxxx X. Xxxxxxxxx (who shall be appointed
Chairman of the Board of Directors), Xxxxxxx X. Xxxxxx and Xx. Xxxxxxx
Xxxxxxxxx. Each director shall hold office until his successor shall have been
duly elected and shall have qualified or until his or her earlier death,
resignation or removal.
Section 3.7. OFFICERS OF ETI. Upon the Closing, the present officers of
ETI shall tender their resignations and simultaneous therewith, the following
persons shall be elected as officers of ETI in accordance with procedures set
forth in the ETI bylaws:
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NAME OFFICE
---- ------
Xx. Xxxx X. Xxxxxxxxx Chairman of the Board, Chief
Executive Officer, President
Xx. Xxxxxxx X. Xxxxxxxxx Secretary
Xxxxxxx X. Xxxxxx Executive Vice President,
Chief Financial Officer
ARTICLE IV.
SPECIAL COVENANTS
Section 4.1. ACCESS TO PROPERTIES AND RECORDS. ETI and Pharma will each
afford to the officers and authorized representatives of the other full access
to the properties, books and records of ETI and Pharma, as the case may be, in
order that each may have full opportunity to make such reasonable investigation
as it shall desire to make of the affairs of the other and each will furnish the
other with such additional financial and operating data and other information as
to the business and properties of ETI and Pharma, as the case may be, as the
other shall from time to time reasonably request.
Section 4.2. AVAILABILITY OF RULE 144. Each of the parties acknowledge
that the ETI Common Shares to be issued pursuant to this Agreement will be
"restricted securities," as that term is defined in Rule 144 promulgated
pursuant to the Securities Act. ETI is under no obligation to register such
shares under the Securities Act, or otherwise. Notwithstanding the foregoing,
however, following the Closing Date, ETI will use its reasonable efforts to: (a)
make publicly available on a regular basis not less than quarterly, business and
financial information regarding ETI so as to make available to the shareholders
of ETI the provisions of Rule 144 pursuant to subparagraph (c)(2) thereof; and
(b) within ten (10) days of any written request of any shareholder of ETI, ETI
will provide to such shareholder written confirmation of whether it has been
able to comply with such of the foregoing subparagraph as may then be
applicable. The shareholders of ETI holding restricted securities of ETI as of
the date of this Agreement and their respective heirs, administrators, personal
representatives, successors and assigns, are intended third party beneficiaries
of the provisions set forth herein. The covenants set forth in this Section 4.2
shall survive the Closing and the consummation of the transactions herein
contemplated and shall be the responsibility of those individuals assuming
offices with ETI, including those persons listed in Sections 3.6 and 3.7,
hereinabove.
Section 4.3. INFORMATION FOR ETI PUBLIC REPORTS. Pharma will furnish ETI
with all information concerning Pharma and the Pharma Shareholders, including
all financial statements, required for inclusion in any registration statement
or public report intended to be filed by ETI pursuant to the Securities Act of
1933, as amended, the Securities Exchange Act of 1934, as amended, or any other
applicable federal or state law. Pharma covenants that all information so
furnished for either such registration statement or other public release by ETI,
including the financial statements described in Section 1.4, shall be true and
correct in all material respects without omission of any material fact required
to make the information stated not misleading.
Section 4.4. SPECIAL COVENANTS AND REPRESENTATIONS REGARDING THE ETI
COMMON SHARES TO BE ISSUED IN THE EXCHANGE. The consummation of this Agreement,
14
including the issuance of the ETI Common Shares to the shareholders of Pharma as
contemplated hereby, constitutes the offer and sale of securities under the
Securities Act, and applicable state statutes. Such transaction shall be
consummated in reliance on exemptions from the registration and prospectus
delivery requirements of such statutes which depend, inter alia, upon the
circumstances under which the Pharma shareholders acquire such securities. In
connection with reliance upon exemptions from the registration and prospectus
delivery requirements for such transactions, at the Closing, Pharma shall cause
to be delivered, and the Pharma shareholders shall deliver to ETI, the
investment letter referenced in Section 3.1.
Section 4.5. THIRD PARTY CONSENTS. ETI and Pharma agree to cooperate with
each other in order to obtain any required third party consents to this
Agreement and the transactions herein contemplated.
Section 4.6. ACTIONS PRIOR TO CLOSING.
(a) From and after the date of this Agreement until the Closing Date
and except as set forth in the ETI or Pharma Schedules or as permitted or
contemplated by this Agreement, ETI and Pharma will each use its best
efforts to:
(i) carry on its business in substantially the same
manner as it has heretofore;
(ii) maintain and keep its properties in states of good repair
and condition as at present, except for depreciation due to ordinary
wear and tear and damage due to casualty;
(iii) maintain in full force and effect insurance
comparable in amount and in scope of coverage to that now
maintained by it;
(iv) perform in all material respects all of its obligations
under material contracts, leases and instruments relating to or
affecting its assets, properties and business;
(v) maintain and preserve its business organization
intact, to retain its key employees and to maintain its
relationship with its material suppliers and customers; and
(vi) fully comply with and perform in all material respects
all obligations and duties imposed on it by all federal and state
laws and all rules, regulations and orders imposed by federal or
state governmental authorities.
(b) From and after the date of this Agreement until the Closing
Date, neither ETI nor Pharma will, without the prior consent of the other
party:
(i) except as otherwise specifically set forth herein,
make any change in their respective certificates or articles of
incorporation or bylaws;
(ii) declare or pay any dividend on its outstanding shares of
capital stock, except as may otherwise be required by law, or effect
any stock split or otherwise change its capitalization, except as
provided herein;
15
(iii) enter into or amend any employment, severance or
similar agreements or arrangements with any directors or officers;
(iv) issue any shares of its capital stock;
(v) grant, confer or award any options, warrants, conversion
rights or other rights not existing on the date hereof to acquire
any shares of its capital stock; or
(vi) purchase or redeem any shares of its capital stock,
except as disclosed herein.
Section 4.7. INDEMNIFICATION.
(a) Pharma hereby agrees to indemnify ETI and each of the officers,
agents and directors of ETI as of the date of execution of this Agreement
against any loss, liability, claim, damage or expense (including, but not
limited to, any and all expense whatsoever reasonably incurred in
investigating, preparing or defending against any litigation, commenced or
threatened or any claim whatsoever), to which it or they may become
subject arising out of or based on any inaccuracy appearing in or
misrepresentation made in this Agreement. The indemnification provided for
in this paragraph shall survive the Closing and consummation of the
transactions contemplated hereby and termination of this Agreement for a
period of 18 months; and
(b) ETI and its officers and directors, Telsey and Xxxx, jointly and
severally, hereby agree to indemnify Pharma and each of the officers,
employees, agents, directors and current shareholders of Pharma as of the
Closing Date against any loss, liability, claim, damage or expense
(including, but not limited to, any and all expense whatsoever reasonably
incurred in investigating, preparing or defending against any litigation,
commenced or threatened or any claim whatsoever), to which it or they may
become subject arising out of or based on any inaccuracy appearing in or
misrepresentation made in this Agreement and particularly the
representation regarding no liabilities referred to in Section 2.4(b). The
indemnification provided for in this Section shall survive the Closing and
consummation of the transactions contemplated hereby and termination of
this Agreement for a period of 18 months.
ARTICLE V.
CONDITIONS PRECEDENT TO OBLIGATIONS OF ETI
The obligations of ETI under this Agreement are subject to the
satisfaction, at or before the Closing Date, of the following conditions:
Section 5.1. ACCURACY OF REPRESENTATIONS. The representations and
warranties made by Pharma in this Agreement were true when made and shall be
true at the Closing Date with the same force and effect as if such
representations and warranties were made at the Closing Date (except for changes
therein permitted by this Agreement), and Pharma shall have performed or
complied with all covenants and conditions required by this Agreement to be
performed or complied with by Pharma prior to or at the Closing. ETI shall be
furnished with a certificate, signed by a duly authorized officer of Pharma and
dated the Closing Date, to the foregoing effect.
16
Section 5.2. SHAREHOLDER APPROVAL. The requisite number of
shareholders of Pharma shall have approved this Agreement and the
transactions contemplated thereby.
Section 5.3. NO MATERIAL ADVERSE CHANGE. Prior to the Closing Date, there
shall not have occurred any material adverse change in the financial condition,
business or operations of nor shall any event have occurred which, with the
lapse of time or the giving of notice, may cause or create any material adverse
change in the financial condition, business or operations of Pharma.
Section 5.4. OFFICER'S CERTIFICATE. ETI shall be furnished with a
certificate dated the Closing Date and signed by the Chief Executive Officer and
Secretary of Pharma to the effect that
(a) no litigation, proceeding, investigation or inquiry is pending
or, to the best knowledge of Pharma, threatened, which might result in an
action to enjoin or prevent the consummation of the transactions
contemplated by this Agreement or, to the extent not disclosed in the
Pharma Schedules, by or against Pharma which might result in any material
adverse change in any of the assets, properties, business or operations of
Pharma;
(b) Pharma is a corporation duly organized, validly existing, and in
good standing under the laws of Florida and has the corporate power and is
duly authorized, qualified, franchised and licensed under all material
applicable laws, regulations, ordinances and orders of public authorities
to own all of its properties and assets and to conduct its business as now
conducted, including qualification to do business as a foreign corporation
in the states in which the character and location of the assets owned by
it or the nature of the business transacted by it requires qualification;
(c) To the best knowledge of Pharma, the execution and delivery by
Pharma of this Agreement and the consummation of the transactions
contemplated by this Agreement in accordance with the terms hereof will
not conflict with or result in the breach of any term or provision of
Pharma's articles of incorporation or bylaws or violate any court order,
writ, injunction or decree applicable to Pharma, or its properties or
assets;
(d) The authorized capitalization of Pharma consists of 5,000,000
Common Shares, par value $0.001 per share. As of the Closing Date,
3,372,584 of the authorized Pharma Common Shares will be issued and
outstanding. All issued and outstanding shares are legally issued, fully
paid and nonassessable and not issued in violation of the preemptive
rights of any person. Except as set forth in the Pharma Schedules, there
are no outstanding subscriptions, options, rights, warrants, convertible
securities or other agreements or commitments obligating Pharma to issue
any additional shares of any class of its capital stock.
(e) This Agreement has been duly and validly authorized,
executed and delivered by Pharma;
(f) Pharma has taken all actions required by the applicable
laws of Florida to permit the transfer of the Pharma Common Shares to
ETI; and
(g) Pharma does not have in excess of 35 non-accredited investors
(as that term is defined in Rule 501(a) promulgated under the Securities
Act of 1933, as amended) as shareholders as of the Closing Date.
17
Section 5.5. OTHER ITEMS. ETI shall have received such further
documents, certificates or instruments relating to the transactions
contemplated hereby as ETI may reasonably request.
ARTICLE VI.
CONDITIONS PRECEDENT TO OBLIGATIONS OF PHARMA
The obligations of Pharma under this Agreement are subject to the
satisfaction, at or before the Closing Date (unless otherwise indicated herein),
of the following conditions:
Section 6.1. ACCURACY OF REPRESENTATIONS. The representations and
warranties made by ETI, Telsey and Xxxx in this Agreement were true when made
and shall be true as of the Closing Date (except for changes therein permitted
by this Agreement) with the same force and effect as if such representations and
warranties were made at and as of the Closing Date, and ETI shall have performed
and complied with all covenants and conditions required by this Agreement to be
performed or complied with by ETI prior to or at the Closing.
Section 6.2. NO MATERIAL ADVERSE CHANGE. Prior to the Closing Date, there
shall not have occurred any material adverse change in the financial condition,
business or operations of nor shall any event have occurred which, with the
lapse of time or the giving of notice, may cause or create any material adverse
change in the financial condition, business or operations of ETI.
Section 6.3. COMPLIANCE WITH REPORTING REQUIREMENTS. ETI, Telsey and Xxxx
represent, jointly and severally, that as of the Closing Date, ETI shall be
current in, and in compliance with all requirements of, all filings required to
be tendered to the Securities and Exchange Commission pursuant to the Securities
Exchange Act of 1934, as amended.
Section 6.4. OFFICER'S CERTIFICATE. Pharma shall be furnished with a
certificate dated the Closing Date and signed by the President and Secretary
of ETI to the effect that
(a) no litigation, proceeding, investigation or inquiry is pending
or, to the best knowledge of ETI, threatened, which might result in an
action to enjoin or prevent the consummation of the transactions
contemplated by this Agreement or, to the extent not disclosed in the ETI
Schedules, by or against ETI which might result in any material adverse
change in any of the assets, properties, business or operations of ETI;
(b) ETI is a corporation duly organized, validly existing and in
good standing under the laws of the State of Colorado and has the
corporate power and is duly authorized, qualified, franchised and licensed
under all material applicable laws, regulations, ordinances and orders of
public authorities to own all of its properties and assets and to conduct
its business as now conducted, including qualification to do business as a
foreign corporation in the states in which the character and location of
the assets owned by it or the nature of the business transacted by it
requires qualification;
(c) to the best knowledge of ETI, the execution and delivery by ETI
of this Agreement and the consummation of the transactions contemplated by
this Agreement in accordance with the terms hereof will not conflict with
or result in the breach of any term or provision of ETI's Articles of
Incorporation or Bylaws or violate any court order, writ, injunction or
decree applicable to ETI or its properties or assets;
(d) the authorized capitalization of ETI consists of 100,000,000
shares of common stock, no par value per share and 25,000,000 shares of
18
preferred stock, par value $.01 per share. There are no preferred shares
issued or outstanding. The Board of Directors of ETI have effected a
forward split of the ETI issued and outstanding common stock in which four
shares of common stock were issued in exchange for every one share of
common stock which was previously issued and outstanding. As of the
Closing Date there will be 2,000,000 shares of common stock issued and
outstanding held by the existing security holders of ETI. All issued and
outstanding ETI common shares have been legally issued, fully paid and are
non-assessable. Except as set forth in the ETI Schedules or otherwise
disclosed to Pharma, there are no outstanding subscriptions, options,
rights, warrants, convertible securities or other agreements or
commitments obligating ETI to issue any additional shares of any class of
its capital stock.
(e) this Agreement has been duly and validly authorized,
executed and delivered by ETI;
(f) ETI has taken all actions required by the applicable laws of the
State of Colorado to permit the exchange of the Pharma Common Shares to
ETI Common Shares.
Section 6.5. OTHER ITEMS. Pharma shall have received such further
documents, certificates, or instruments relating to the transactions
contemplated hereby as Pharma may reasonably request.
ARTICLE VII.
MISCELLANEOUS
Section 7.1. BROKERS AND FINDERS. Except as set forth in Schedule 7.1,
each party hereto hereby represents and warrants that it is under no obligation,
express or implied, to pay certain finders in connection with the bringing of
the parties together in the negotiation, execution, or consummation of this
Agreement. The parties each agree to indemnify the other against any claim by
any third person not listed in Schedule 7.1 for any commission, brokerage or
finder's fee or other payment with respect to this Agreement or the transactions
contemplated hereby based on any alleged agreement or understanding between the
indemnifying party and such third person, whether express or implied from the
actions of the indemnifying party.
Section 7.2. LAW. FORUM AND JURISDICTION. This Agreement shall be
construed and interpreted in accordance with the laws of the State of
Colorado, except as the corporate law of Florida applies to Pharma and as US
federal law may be applicable.
Section 7.3. NOTICES. Any notices or other communications required or
permitted hereunder shall be sufficiently given if personally delivered to it or
sent by recognized overnight delivery service, addressed as follows:
If to ETI: Xxxxxx X. Xxxxxx, Esq.
0000 X. Xxxxxx Xx., Xx. 000
Xxxxxx, XX 00000
If to Pharma: Xx. Xxxx X. Xxxxxxxxx, President
PharmaSystems Cost Containment Corp.
0000 XX 0xx Xx., #000
Xxxxx, XX 00000
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With a copy to: Xxxxxxx Xxxxxx, Esq.
Xxxxxxxxxxx & Xxxxxxxx LLP
Miami Center, 20th Floor
000 X. Xxxxxxxx Xxxx.
Xxxxx, XX 00000-0000
or such other addresses as shall be furnished in writing by any party in the
manner for giving notices hereunder, and any such notice or communication shall
be deemed to have been given as of the date so delivered.
Section 7.4. ATTORNEYS' FEES. In the event that any party institutes any
action or suit to enforce this Agreement or to secure relief from any default
hereunder or breach hereof, the non-prevailing party or parties shall reimburse
the prevailing party or parties for all costs, including reasonable attorneys'
fees, incurred in connection therewith and in enforcing or collecting any
judgment rendered therein.
Section 7.5. CONFIDENTIALITY. Each party hereto agrees with the other
parties that, unless and until the reorganization contemplated by this Agreement
has been consummated, they and their representatives will hold in strict
confidence all data and information obtained with respect to another party or
any subsidiary thereof from any representative, officer, director or employee,
or from any books or records or from personal inspection, of such other party,
and shall not use such data or information or disclose the same to others,
except: (i) to the extent such data is a matter of public knowledge or is
required by law to be published; and (ii) to the extent that such data or
information must be used or disclosed in order to consummate the transactions
contemplated by this Agreement.
Section 7.6. SCHEDULES; KNOWLEDGE. Each party is presumed to have
full knowledge of all information set forth in the other party's schedules
delivered pursuant to this Agreement.
Section 7.7. THIRD PARTY BENEFICIARIES. This contract is solely among ETI,
Telsey, Kell and Pharma and, except as specifically provided, no director,
officer, shareholder, employee, agent, independent contractor or any other
person or entity shall be deemed to be a third party beneficiary of this
Agreement.
Section 7.8. ENTIRE AGREEMENT. This Agreement represents the entire
agreement among the parties relating to the subject matter hereof. This
Agreement alone fully and completely expresses the agreement of the parties
relating to the subject matter hereof. There are no other courses of dealing,
understandings, agreements, representations or warranties, written or oral,
except as set forth herein. This Agreement may not be amended or modified,
except by a written agreement signed by all parties hereto.
Section 7.9. SURVIVAL; TERMINATION. The representations, warranties
and covenants of the respective parties shall survive the Closing Date and
the consummation of the transactions herein contemplated for 18 months.
Section 7.10. COUNTERPARTS. This Agreement may be executed in
multiple counterparts, each of which shall be deemed an original and all of
which taken together shall be but a single instrument.
Section 7.11. AMENDMENT OR WAIVER. Every right and remedy provided herein
shall be cumulative with every other right and remedy, whether conferred herein,
at law, or in equity, and may be enforced concurrently herewith, and no waiver
20
by any party of the performance of any obligation by the other shall be
construed as a waiver of the same or any other default then, theretofore, or
thereafter occurring or existing. At any time prior to the Closing Date, this
Agreement may be amended by a writing signed by all parties hereto, with respect
to any of the terms contained herein, and any term or condition of this
Agreement may be waived or the time for performance hereof may be extended by a
writing signed by the party or parties for whose benefit the provision is
intended.
Section 7.12. INCORPORATION OF RECITALS. All of the recitals hereof
are incorporated by this reference and are made a part hereof as though set
forth at length herein.
Section 7.13. EXPENSES. Each party herein shall bear all of their
respective costs and expenses incurred in connection with the negotiation of
this Agreement and in the consummation of the transactions provided for herein
and the preparation therefor.
Section 7.14. HEADINGS; CONTEXT. The headings of the sections and
paragraphs contained in this Agreement are for convenience of reference only and
do not form a part hereof and in no way modify, interpret or construe the
meaning of this Agreement.
Section 7.15. BENEFIT. This Agreement shall be binding upon and shall
insure only to the benefit of the parties hereto, and their permitted assigns
hereunder. This Agreement shall not be assigned by any party without the prior
written consent of the other parties.
Section 7.16. PUBLIC ANNOUNCEMENTS. Except as may be required by law, no
party hereto shall make any public announcement or filing with respect to the
transactions provided for herein without the prior consent of the other party
hereto.
Section 7.17. SEVERABILITY. In the event that any particular provision or
provisions of this Agreement or the other agreements contained herein shall for
any reason hereafter be determined to be unenforceable, or in violation of any
law, governmental order or regulation, such unenforceability or violation shall
not affect the remaining provisions of such agreements, which shall continue in
full force and effect and be binding upon the respective parties hereto.
Section 7.18. FAILURE OF CONDITIONS; TERMINATION. In the event any of the
conditions specified in this Agreement shall not be fulfilled on or before the
Closing Date, any of the parties have the right either to proceed or, upon
prompt written notice to the other, to terminate and rescind this Agreement
without liability to any other parties. The election to proceed shall not affect
the right of such electing party reasonably to require the other parties to
continue to use their efforts to fulfill the unmet conditions.
Section 7.19. NO STRICT CONSTRUCTION. The language of this Agreement shall
be construed as a whole, according to its fair meaning and intendment, and not
strictly for or against any party hereto, regardless of which party drafted or
was principally responsible for drafting the Agreement or terms or conditions
hereof.
Section 7.20. EXECUTION KNOWING AND VOLUNTARY. In executing this
Agreement, the parties severally acknowledge and represent that each: (a) has
fully and carefully read and considered this Agreement; (b) has been or has had
the opportunity to be fully apprised by its attorneys of the legal effect and
meaning of this document and all terms and conditions hereof; and (c) is
executing this Agreement voluntarily, free from any influence, coercion or
duress of any kind.
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed as of the date first above written.
EURO-TEL, INC.
ATTEST:
/s/ Xxxxxxx X. Xxxx By: /s/ Xxxxxx X. Xxxxxx
-------------------------------- ------------------------------
Secretary or Xxxxxx X. Xxxxxx, President
Assistant Secretary
/s/ Xxxxxxx X. Xxxx /s/ Xxxxxx X. Xxxxxx
-------------------------------- ----------------------------------
Xxxxxxx X. Xxxx Xxxxxx X. Xxxxxx
ATTEST: PHARMASYSTEMS COST CONTAINMENT
CORP.
/s/ Xxxxxxx Xxxxxx By: /s/ Xxxx X. Xxxxxxxxx, President
------------------------- --------------------------------
Secretary or Xx. Xxxx X. Xxxxxxxxx, President
Assistant Secretary
22
EXHIBIT "A"
LIST OF PHARMA SHAREHOLDERS
PHARMASYSTEMS COST CONTAINMENT CORP.
As Of June 14,1997
STOCKHOLDER'S NAME INVESTED NUMBER OF SHARES ADDRESS
ADVANCED RESPIRATORY CARE INC 936,330.00 0000 X.X. 0xx XXXXXX #000-XXXXX, XX 00000
XXXXX, XXXXXXX 62,500.00 25,000 25,000.00 X.X. XXX 0000-XXXXXX, XX 00000
XXXXXXX, XXXXXXXX M.D. 50,000.00 16,667 8,333.50 0000 X.X. 00xx XXXXXX-XXXXX, XX 00000
XXXXXXX, XXXXXXX & XXXX 40,000.00 13,333 6,666.50 00000 X.X. 00xx XXXXXX-XXXXX, XX 00000
XXXXXX, XXXX & XXXXXX 50,000.00 16,667 8,333.50 000 X.X. 000xx XXXXXX #000-XXXXX, XX 00000
XXXXXX, XXXX M.D. 50,000.00 33,333 19,523.50 00000 X.X. 00xx XXXXXX #000-XXXXX, XX 00000
XXXXX, XXXXXX & XXXX L. M.D. 50,000.00 16,667 8,333.50 00000 X.X. 00xx XXXXXXX-XXXXX, XX 00000
BROTOWISKI, XXXXX 50,000.00 16,667 19,762.50 000 XXXX XXXXXXXXX-XX XXXXXXXXXX, XX 00000
XXXXX, XXXXXX 20,000.00 5,714 5,714.00 000 XXXX XXXX XXXX-XXX XXXXX, XX 00000
XXXXXXX, XXXXXX & XXXXX M.D. 30,000.00 10,000 5,000.00 0000 X.X. 00xx XXXXXX-XXXXX, XX 00000
XXXXXXXX, XXXXX 60,000.00 20,000 10,000.00 00000 X.X. 00xx XXXXXX-XXXXX, XX 00000
XXXXXXXX, XXXX 2,286.00
XXXXXXXXXXX, XXXX M.D. 50,000.00 33,333 16,666.50 0000 XXXX 00xx XXXXXX #000-XXXXXXX, XX 00000
XXXXXX, XXXXXXX 50,000.00 33,333 50,000.00 0000 XXXX 00xx XXXXXX #000-XXXXXXX, XX 00000
XXXXX, XXXXXXXX DMD 50,000.00 33,333 16,666.50 0000 X.X. 00xx XXXXXX #000-XXXXX, XX 00000
COPELENKO, MARIO 1,429.00
XXXXXXX\XXXXXXXXX, XXXXX &
XXXXXX XXXXXX 50,000.00 33,333 16,666.50 00000 X.X. 00xx XXXXXX-XXXXX, XX 00000
XXXX, XXXXX XXXXX 40,000.00 26,667 16,667.00 00000 X.X. 000xx XXXX-XXXXX, XX 00000
XXXXX, XXXX 1,429.00
XXXXXXXXX, XXXXXX X. CONSULTANT 4,348 4,348.00 00 XXXXXX XXX, XXXXXXXXX 00-XXXXX XXXXX,
XX 00000
XXXXXXXXX, XXXXXXX M.D. 50,000.00 12,500 12,500.00 00000 X.X. 00xx XXXXXX XXXXX, XX 00000
XXXXXX, XXXXX 50,000.00 12,500 12,500.00 XXXXX 00 (XXXXX XX XXXXXXX) XXXXXXXX,
XXXXXXXXX XXXXXXXX
XXXXXX, XXXXXX & XXXXX 1,429.00
XXXXXXXXX & XXXXXX Pension Plan 50,000.00 25,000 12,500.00
XXXXXXXX-XXXXX, XXXXXXXXX 2,857.00
HANALF, XXXXX X. 25,000.00 10,000 10,000.00 0000 XXXXX XXXXXXXXX-XXXXXXXX, XX 00000
XXXXX, XXXXXXX M.D. 100,000.00 33,334 26,667.00 XXXXXXX XXXXXXXXX XXXXX #0000 XXXXXXXX-
XXXXXXXX, XXXXX
XXXXX, XXX 25,000.00 7,143 7,143.00 000 XXXXXX XXXXX-XX. XXXXXXXXX, XX 00000
HEALTH CARE WORKSHOP, LTD. 888,294 444,147.00 0000 X.X. 0xx Xxxxxx Xxxxx 000
XXXXXXXXX, XXXXXX 75,000.00 24,286 24,286.00 0 XXXXXXXXX XXXXX-XXXXXXXXX, XX 00000
INTERCARE HEALTH MANAGEMENT, INC. PENSION 100,000 100,000.00 0000 X.X. 0xx XXXXXX #000-XXXXX, XX 00000
XXXXXX, XXXXXX M.D. 100,000.00 50,000 25,000.00 0000 X.X. 00xx XXXXXX #000-XXXXX, XX 00000
J.P.S. INVESTMENT HOLDINGS 50,000.00 20,000 20,000.00 P. O. BOX 1068-GRAND CAYMAN, CAYMAN
ISLANDS B.W.I.
XXXX, XXXXXXX 50,000.00 20,000 20,000.00 10 XXXXXX DRIVE-NORTHPORT, N.Y. 11768
XXXXXXXX, XXXX & XXXXXXXX 50,000.00 16,667 8,333.50 0000 XXXXX XXXXXXX XXXXX-XXXXX, XX 00000
LABRADOR, XXXXX 10,000.00 3,333 1,666.50 00000 X.X. 00xx XXXX-XXXXX, XX 00000
LMI, INC. (XXXXXXXX) 25,000.00 16,667 33,333.50
XXXXX-XXXXXXXXX, XXXXXXX M.D. 200,000.00 100,000 50,000.00
XXXXXXXXX, XXXXXXXXX 2,857.00
MALTA, XXXXXX 10,000.00 2,857 2,857.00 REPUBLICA ARABE XXXXX-3215 OCTAVO PISO-CAPITAL
FEDERAL ARGENTINA 1425
XXXXX, XXXXXX 169,876 84,938.00
XXXXXXXX, XXXXXX M.D & XXXXX 75,000.00 50,000 39,286.00 0000 X.X. 00xx XXXXX-XXXXX, XX 00000
XXXXXXXX\ XXXX, XXXXXXX G. M.D.
& XXXXXX 50,000.00 16,667 8,333.50 00000 X.X. 00xx XXXXXX-XXXXXXXX XXXXX,
XX 00000
XXXXXX-XXXXXXX, XXXXXXX
c\o HYUNDAI LTDA 1,429.00 XXX 00 XX. 000-00-XXXXXXX xx XXXXXX, XXXXXXXX
XXXXXXXXX, XXXXX 2,857.00 0000 XXXXXXX XXXXXX #0000-XXXXX XXXXX,
XX 00000
23
STOCKHOLDER'S NAME INVESTED NUMBER OF SHARES ADDRESS
XXXXXX, XXXXXXX 1,500.00
XXXXXXX, XXXXXX M.D. 25,000.00 12,500 6,250.00 0000 XXXXX XXXXX XXXXXX-XXXXX, XX 00000
XXXX, XXXXXXX M.D. & XXXXXX 100,000.00 66,667 33,333.50 00000 XXXXXXXXX XXXXX-XXXXX XXXXX, XX 00000
XXXXXX, XXXXXX X. 25,000.00 16,667 8,333.50 0000 XXXXXXXXXX XXXXXXX-XXXXXX XXXX, XX 00000
XXXXXX, XXXXXX X. & NILIANA 1,714.00 0000 XXXXXXXXXX XXXXXXX-XXXXXX XXXX, XX 00000
XXXXXXX, XXXXXX X. 50,000.00 16,667 8,333.50 0000 X.X. 00xx XXXXXX-XXXXX, XX 00000
O.C.M. 10,500.00 3,000 3,000.00 000 XXXXXXXXXXX XXXXX-XXXXX XXXXXX, XX 00000
XXXXXXXX, XXXXXXX 25,000.00 8,333 4,166.50 0000 XXXXX XXXXX XXXXX-XX. XXXXXXXXXX,
XX 00000
XXXXXXXX, XXXXXXX X. XX. M.D. P.P. 25,000.00 8,333 4,166.50 0000 XXXXX XXXX-XXXXX XXXXX, XX 00000
XXXXX, XXXXXXXX X. & XXXXXXX XXXXXX 10,000.00 3,333 1,666.50 00000 X.X. 00xx XXXXXX-XXXXX, XX 00000
XXXXXXXXX, XXXXXXX M.D. 150,000.00 75,000 37,500.00 0000 XXXXXX XXXXX #000-XXXXX, XX 00000
PSI HOLDINGS, INC. 1,550,700 775,350.00 0000 XXXXXXX XX., XXX. 000
XXXXX XXXXXX, XX 00000
XXXXX, XXXXXX G. M.D. 25,000.00 16,667 8,333.50 0000 XXXX XXXXXX-XXXXXXX, XX 00000
XXXXXXX, XXXXXX & XX. XXXXX 50,000.00 25,000 12,500.00 00000 X.X. 00xx XXXXX-XXXXX, XX 00000-0000
XXXX-XXXXX, XXXX & XXXXXXXX 25,000.00 12,500 6,250.00 000 XXXXXXXXX XXXXX #000-XXXXX XXXXXX,
XX 00000
XXXXXX, XXXXXX X. & XXXXXXX M. M.D. 205,000.00 102,500 51,250.00 00000 X.X. 00xx XXXXXX-XXXXX, XX 00000
XXXXXX, XXXXXXXX X. 20,100.00 6,700 3,350.00 0000 X.X. 000xx XXXXXX-XXXXX, XX 00000
XXXXXXXXX, XXXXXXX 0000 X.X. 000 xx XXXXXX-XXXXX, XX 00000
XXXXXXXXX, XXXXXXX X. & XXXXX 25,000.00 8,333 4,166.50
XXXXXXXXX, XXXX X. & XXXXX 10,000.00 6,667 26,585.00 0000 X.X. 00xx XXXXXX-XXXXX, XX 00000
XXXXXXXXX, XXXXX 7,142.00
XXXXX, XXXXXX & XXXXXXX 25,000.00 8,333 8,333.00 00000 XXXX XXXXXX XXXXX-XXXXX XXXXX, XX 00000
XXXXXX, XXXXX 25,000.00 16,667 8,333.50 00000 X.X. 0xx XXXXXX-XXXXXXXX XXXXX,
XX 00000
XXXXXXX, XXXXXX 10,000.00
SNVN HOLDINGS, LTD. 25,000.00 8,333 4,166.50
XXXXXXX, XXXXXX 100,000.00 66,667 33,333.50 00000 X.X. 000xx XXXXXX-XXXXX, XX 00000
XXXX XXXXX, XXXX 1,429.00 CAR 00 Xx. 00-00-XXXXX XX xx XXXXXX, XXXXXXXX
XXXXXXX, XXXXXXX 25,000.00 8,333 4,166.50 00000 X.X. 00xx XXXXXX-XXXXXXXX XXXXX,
XX 00000
XXXX, XXXXXXX 50,000.00 33,333 33,333.00 0000 X.X. 00xx XXXXXX-XXXXX, XX 00000
VORASARAN, SUVIMOL 25,000.00 8,333 4,166.50 0000 X.X. 00xx XXXXXX-XXXXX, XX 00000
XXXXXXXXX SECURITIES, LTD 50,000.00 14,286 14,286.00 00 XXXX 000 XXXXXXXX XXXX-XXXXXXX, XX 00000
WORLDWIDE 215000 90,571 90,571.00 0000 X.X. 0xx XXXXXX XXX 000 XXXXX, XX 00000
XXXXXXXXXX, XXX 50,000.00 20,000 20,000.00 00 XXXX XXX XXXXXXX-XXXXXXX, X.X. 00000
XXXXXX, XXXXXXX 1,500.00
TOTAL 3,372,585.00
24
STOCKHOLDER'S NAME TELEPHONE NUMBER
ADVANCED RESPIRATORY CARE INC (000) 000-0000
XXXXX, XXXXXXX
XXXXXXX, XXXXXXXX M.D. (000) 000-0000
XXXXXXX, XXXXXXX & XXXX (000) 000-0000
XXXXXX, XXXX & XXXXXX
XXXXXX, XXXX M.D. (000) 000-0000
XXXXX, XXXXXX & XXXX L. M.D. (000) 000-0000
BROTOWISKI, XXXXX (000) 000-0000
XXXXX, XXXXXX
XXXXXXX, XXXXXX & XXXXX M.D. (000) 000-0000
XXXXXXXX, XXXXX
XXXXXXXX, XXXX
XXXXXXXXXXX, XXXX M.D. (000) 000-0000 O
XXXXXX, XXXXXXX (000) 000-0000
XXXXX, XXXXXXXX DMD
COPELENKO, XXXXX
XXXXXXX\XXXXXXXXX, XXXXX &
XXXXXX XXXXXX
XXXX, XXXXX XXXXX (000) 000-0000
XXXXX, XXXX
XXXXXXXXX, XXXXXX X. (000) 000-0000
XXXXXXXXX, XXXXXXX M.D.
XXXXXX, XXXXX
XXXXXX, XXXXXX & XXXXX
XXXXXXXXX & XXXXXX Pension Plan
XXXXXXXX-XXXXX, XXXXXXXXX
HANALF, XXXXX X.
XXXXX, ANDREAS M.D.
XXXXX, XXX
HEALTH CARE WORKSHOP, LTD. (000) 000-0000
XXXXXXXXX, XXXXXX
INTERCARE HEALTH MANAGEMENT, INC. (000) 000-0000
XXXXXX, XXXXXX M.D. (000) 000-0000
J.P.S. INVESTMENT HOLDINGS
XXXX, XXXXXXX
XXXXXXXX, XXXX & XXXXXXXX (000) 000-0000
LABRADOR, XXXXX (000) 000-0000
LMI, INC. (XXXXXXXX)
XXXXX-XXXXXXXXX, XXXXXXX M.D.
XXXXXXXXX, XXXXXXXXX
MALTA, XXXXXX
XXXXX, XXXXXX
XXXXXXXX, XXXXXX M.D & XXXXX
XXXXXXXX\ XXXX, XXXXXXX G. M.D.
& XXXXXX (000) 000-0000
XXXXXX-XXXXXXX, XXXXXXX
c\o HYUNDAI LTDA 000-00-000-0000
XXXXXXXXX, XXXXX (000) 000-0000 H
25
STOCKHOLDER'S NAME TELEPHONE NUMBER
XXXXXX, XXXXXXX
XXXXXXX, XXXXXX M.D.
XXXX, XXXXXXX M.D. & XXXXXX (000) 000-0000
XXXXXX, XXXXXX X. (000) 000-0000
XXXXXX, XXXXXX X. & NILIANA (000) 000-0000
XXXXXXX, XXXXXX X. (000) 000-0000
O.C.M.
XXXXXXXX, XXXXXXX
XXXXXXXX, XXXXXXX X. XX. M.D. P.P. (000) 000-0000
XXXXX, XXXXXXXX X. & XXXXXXX XXXXXX
XXXXXXXXX, XXXXXXX M.D.
PSI HOLDINGS, INC. (000) 000-0000
XXXXX, XXXXXX G. M.D.
XXXXXXX, XXXXXX & XX. XXXXX
XXXX-XXXXX, XXXX & XXXXXXXX (000) 000-0000
XXXXXX, XXXXXX X. & XXXXXXX M. M.D.
XXXXXX, XXXXXXXX X.
XXXXXXXXX, XXXXXXX
XXXXXXXXX, XXXXXXX X. & XXXXX
XXXXXXXXX, XXXX X. & XXXXX (000) 000-0000
XXXXXXXXX, XXXXX
XXXXX, XXXXXX & XXXXXXX
XXXXXX, XXXXX (000) 000-0000
XXXXXXX, XXXXXX
SNVN HOLDINGS, LTD.
XXXXXXX, XXXXXX (000) 000-0000 X
XXXX XXXXX, XXXX 011-57-1-236-1565
XXXXXXX, XXXXXXX (000) 000-0000
XXXX, XXXXXXX (000) 000-0000
VORASARAN, XXXXXXX
XXXXXXXXX SECURITIES, LTD
WORLDWIDE (000) 000-0000
XXXXXXXXXX, XXX
XXXXXX, XXXXXXX
TOTAL 3,372,585.00
26
EXHIBIT "B"
FORM OF INVESTMENT LETTER
INVESTMENT LETTER
June , 1997
Euro-Tel, Inc.
0000 X. Xxxxxx Xx., Xxxxx 000
Xxxxxx, Xxxxxxxx 00000
Gentlemen:
The undersigned herewith deposits certificate(s) for shares of common stock of
PharmaSystems Cost Containment Corp., a Florida corporation, ("PHARMA"), as
described below (endorsed, or having executed stock powers attached) in
acceptance of and subject to the terms and conditions of that certain Agreement
and Plan of Reorganization (the "Agreement"), between Euro-Tel, Inc. and Pharma,
dated June 20, 1997, receipt of which is hereby acknowledged, in exchange for
shares of Common Stock of Euro-Tel, Inc. (the "EXCHANGE SHARES"). If any
condition precedent to the Agreement is not satisfied within the relevant time
parameters established in the Agreement (or any extension thereof), the
certificate(s) are to be returned to the undersigned.
The undersigned hereby represents, warrants, covenants and agrees with you that,
in connection with the undersigned's acceptance of the Exchange Shares and as of
the date of this letter:
1. The undersigned is aware that his, her or its acceptance of the
Exchange Shares is irrevocable, absent an extension of the Expiration Date of
any material change to any of the terms and conditions of the Agreement.
2. The undersigned warrants full authority to deposit all shares
referred to above and Euro-Tel, Inc. will acquire a good and unencumbered
title thereto.
3. The undersigned has full power and authority to enter into this
Agreement and that this Agreement constitutes a valid and legally binding
obligation of the undersigned.
4. By execution hereof, the undersigned hereby confirms that the Pharma
common stock to be received in exchange for Euro-Tel, Inc. common stock (the
"SECURITIES"), will be acquired for investment for the undersigned's own
account, not as a nominee or agent, and not with a view to the resale or
distribution of any part thereof, and that the undersigned has no present
intention of selling, granting any participation in, or otherwise distributing
the same. By execution hereof, the undersigned further represents the
undersigned does not have any contract, undertaking, agreement or arrangement
with any third party, with respect to any of the Securities.
5. The undersigned understands that the Securities are being issued
pursuant to available exemption thereto and have not been registered under the
Securities Act of 1933, as amended (the "1933 ACT"), or under any state
securities laws. The undersigned understands that no registration statement has
been filed with the United States Securities and Exchange Commission nor with
any other regulatory authority and that, as a result, any benefit which might
normally accrue to a holder such as the undersigned by an impartial review of
such a registration statement by the Securities and Exchange Commission or other
regulatory authority will not be forthcoming. The undersigned understands that
he/she/it cannot sell the Securities unless such sale is registered under the
1933 Act and applicable state securities laws or exemptions from such
27
Euro-Tel, Inc.
June __, 1997
Page 2
registration become available. In this connection the undersigned understands
that the Company has advised the Transfer Agent for the Common Shares that the
Securities are "restricted securities" under the 1933 Act and that they may not
be transferred by the undersigned to any person without the prior consent of the
Company, which consent of the Company will require an opinion of counsel to the
effect that, in the event the Securities are not registered under the 1933 Act,
any transfer as may be proposed by the undersigned must be entitled to an
exemption from the registration provisions of the 1933 Act. To this end, the
undersigned acknowledges that a legend to the following effect will be placed
upon the certificate representing the Securities and that the Transfer Agent has
been advised of such facts:
THESE SECURITIES HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT
OF 1933, AS AMENDED, AND MAY BE OFFERED AND SOLD ONLY IF REGISTERED
PURSUANT TO THE PROVISIONS OF THE ACT OR IF AN EXEMPTION FROM
REGISTRATION THEREUNDER IS AVAILABLE, THE AVAILABILITY OF WHICH MUST
BE ESTABLISHED TO THE SATISFACTION OF THE COMPANY.
The undersigned understands that the foregoing legend on his/her its
certificate for the Common Shares limits their value, including their value as
collateral.
6. The undersigned represents that he/she/it is experienced in evaluation
and investing in securities of companies in the development stage and
acknowledges that he/she it is able to fend for itself, can bear the economic
risk of this investment and has such knowledge and experience in financial and
business matters that it is capable of evaluating the merits and risks of the
investment in the Securities.
IN WITNESS WHEREOF, the undersigned has duly executed this Investment
Letter as of the date indicated hereon.
Dated: June , 1997
Very truly yours,
----------------------------
(signature)
----------------------------
(print name in full)
----------------------------
(street address)
----------------------------
(city, state, zip)
----------------------------
(social security number or
employer identification no.)
28
Schedule 1.3
Pharma Subsidiaries
1. Xxx'x Acquisition Corporation, a Florida corporation
2. Advanced Respiratory Care, Inc., a Florida corporation
29
Schedule 1.4
Financial Statements
1.Attached hereto are Pharma's audited balance sheet, statement of operations,
shareholder equity, cash flows and notes thereto dated as of December 31,
1996.
2.Attached hereto are Pharma's unaudited balance sheet, statement of
operations, shareholder equity, cash flows and notes thereto dated March 31,
1997.
30
Schedule 1.6
Options, Warrants, Calls or Commitments
Redeemable warrants for 1,000,000 shares of Pharma common stock subscribed
for by VJS Intl Holdings, Inc.
31
Schedule 1.7
Absence of Certain Changes or Events
1.7(a) None
1.7(b)(i) The Bylaws of Pharma were amended in May, 1997 to lower the
voting threshold for shareholder action from a super-
majority requirement of seventy-five percent (75%) to a
simple majority requirement.
1.7(b)(ii) Stock Redemption Agreement dated June 7, 1997 by and among
Pharma, PSI Holdings, Inc., a Florida corporation ("PSI")
and Xxxxxxx Xxxxx-Xxxxxxxxx, M.D. ("Xxxxx-Xxxxxxxxx")
1.7(b)(ii) Pharma has made promissory notes dated June 7, 1997 in the
principal amounts of $1,346,030.50 and $104,300 in favor of
PSI and Xxxxx-Xxxxxxxxx, respectively
1.7(b)(v) Pharma entered into a Stock Purchase Agreement dated June
19, 1997 with Xxxxxx X. Xxxxxxxxx, M.D., Xxxxx Xxxxxxxxx
and Xxxxxx X. Xxxxx pursuant to which Pharma purchased one
hundred percent (100%) of the issued and outstanding common
stock of Advanced Respiratory Care, Inc., a Florida
corporation.
1.7(c) None
1.7(d) None
32
Schedule 1.8
Title and Related Matters
None
33
Schedule 1.9
Litigation or Threatened Litigation
There is an ongoing dispute between Pharma and McKesson Xxxxxxx ("McKesson")
regarding a purported outstanding trade payable in the aggregate amount of
$550,000 purportedly owed by Pharma. McKesson alleges that Pharma owes $550,000
to McKesson for pharmaceutical products purchased from Fox Meyer. McKesson
purchased such purported claim from Fox Meyer during Fox Xxxxx'x bankruptcy
proceedings. Pharma is currently attempting to settle the dispute in the
pre-litigation stage. As of the date hereof, Pharma has not been contacted by
McKesson's counsel and no litigation has been threatened against Pharma. Pharma
previously forwarded a settlement proposal on April 7, 1997 to McKesson's
collection agency, United Merchantile Assoc. in an attempt to resolve the
foregoing dispute, but has yet to receive any answer thereto.
34
Schedule 1.10
Contracts
1.10(a) Stock Purchase Agreement dated June 19, 1997 by and among
Pharma, Xxxx X. Xxxxxxxxx, M.D., Xxxxx Xxxxxxxxx and Xxxxxx
X. Xxxxx.
1.10(a) Intermark Trade Center Lease Agreement dated August 1,
1995, by and between Shusho Investment Inc. and Pharma.
1.10(b)(i) Employment Agreement dated June 19, 1997 by and between
Pharma and Xxxx X. Xxxxxxxxx, M.D.
1.10(b)(i) Employment Agreement dated June 19, 1997 by and between
Pharma and Xxxxxxx Xxxxxx.
1.10(b)(i) Employment Agreement dated June 19, 1997 by and between
Pharma and Xxxxxxx X. Xxxxxxxxx.
1.10(b)(iii) Stock Redemption Agreement dated June 7, 1997 by and among
Pharma, PSI Holdings, Inc., a Florida corporation ("PSI")
and Xxxxxxx Xxxxx-Xxxxxxxxx, M.D. ("Xxxxx-Xxxxxxxxx")
1.10(b)(iii) Pharma has made promissory notes dated June 7, 1997 in the
principal amounts of $1,346,030.50 and $104,300 in favor of
PSI and Xxxxx-Xxxxxxxxx, respectively
35
Schedule 1.11
Material Contract Defaults
None
36
Schedule 1.12
Conflicts With Other Instruments
None
37
Schedule 1.14
Compliance With Laws and Regulations
None
38
Schedule 1.15
Insurance
Commercial property coverage provided by CNA Insurance Company for the period
commencing June 1, 1997 and ending on June 1, 1998, on such terms and conditions
as set forth on the insurance policy attached hereto.
39
Schedule 1.17
Material Transactions or Affiliations
Stock Purchase Agreement dated June 19, 1997 by and among Pharma, Xxxx X.
Xxxxxxxxx, M.D., Xxxxx Xxxxxxxxx and Xxxxxx X. Xxxxx.
Employment Agreement dated June 19, 1997 by and between Pharma and Xxxx X.
Xxxxxxxxx, M.D.
Stock Redemption Agreement dated June 7, 1997 by and among Pharma, PSI Holdings,
Inc., a Florida corporation ("PSI") and Xxxxxxx Xxxxx-Xxxxxxxxx, Xx., M.D.
("Xxxxx-Xxxxxxxxx")
Promissory Notes dated June 7, 1997 in the principal amounts of $1,346,030.50
and $104,300 made by Pharma in favor of PSI and Xxxxx-Xxxxxxxxx, respectively.
40
Schedule 1.20(f)
Compensation of Executive Officers
Compensation
Executive's Name Position per Annum
Xxxx X. Xxxxxxxxx, M.D. President $360,000
Xxxxxxx Xxxxxx Chief Financial Officer $120,000
Xxxxxxx X. Xxxxxxxxx Vice President of $104,000
Marketing
Xxxxxx Xxxxxx Vice President of $104,000
Marketing
41
